(858) 672-3100 | MON - FRI: 08:00 - 05:00 PM

Reviewing Vendor Contracts for Your HOA in Current Times

Have you recently reviewed your vendor contracts? Revisiting vendor contracts can be very important, especially in ever changing times. There are key items you want to look for such as liabilities, how to reduce the risk of litigations, and most importantly, making sure the needs of your community are being met.

With the rules and regulations of the country changing as quickly as they are, many of your vendor contracts could be out of date and need refreshing. Let’s review some important information you should look for in your vendors contracts.

Start Internally

Before diving in and pulling out all your vendor contracts, start by evaluating your HOA and community. Review your goals and conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis. The world is changing fast, and your goals and visions may be changing as well. Consider any threats you might not have thought of in the beginning of the year, as well as strengths that your HOA can thrive from.

Once you’ve determined your goals for the rest of the year and conducted a SWOT analysis, you should have a clearer idea of what you’re looking for in a vendor.

Reviewing Contracts

There are several essential items to look for when reviewing your vendor’s contract. First and foremost, make sure their goals align with the goals of your HOA and your community. The work the vendor is guaranteeing should meet the expectations of the HOA, and in a timely manner.

Timing

A good contract will detail relevant time frames and answer the following questions: (a) When does the contract become effective? (b) What is the deadline for completion of work? (c) How long will the contract remain in force? (d) Are party notification requirements time sensitive? (e) Is the contract auto-renewing, and if so, when, and for how long? (f) Do material terms (i.e. price) change throughout the effective date of the contract?

Review current contracts to ensure jobs are being completed on time and that you are not overpaying for services. Also, check to see if any contracts are expired or about to expire. This can be an opportunity to restructure the contract to meet any new needs of the community.

Liability

Between pandemics, changing government regulations, uncontrollable acts of nature, protests and riots, or any other unanticipated event, there are a lot of things that could prevent a vendor from being able to complete their work. In the case of this you do not want to be responsible for paying the vendor for work that they were unable to complete.

A force majeure clause will cover any of these incidents. Merriam-Webster’s Dictionary defines “force majeure” as “superior or irresistible force” or “an event or effect that cannot be reasonably anticipated or controlled.” Force majeure clauses are designed to relieve a party from penalties for breach of contract when circumstances beyond the party’s control render performance untenable or impossible. This will protect both the HOA and the vendor.

Litigation and Attorney Fees

In the event there is a contract dispute, you want to make sure you are covered. Contract disputes can become very expensive to litigate. Often, litigation expenses can prohibit a HOA from seeking court assistance to enforce contract terms.

To prevent this, a good contract should include attorney’s fee provisions. This will allow a prevailing association to recover court costs, expenses, and attorney’s fees. Having this in the contract will also help avoid the situation all together, since the vendor will not want to have to cover fees if this event were to arise.

We can help!

Atlantic and Pacific Management can offer expert advice and assistance to help you review vendor contracts and make the best decisions for your HOA. For more information, or anything else HOA related, reach out to Atlantic and Pacific Management.

Posted in HOA
Scroll to top